In Re READYONE INDUSTRIES, INC.
394 S.W.3d 680
Tex. App.2012Background
- Carreon sued ReadyOne for on-the-job negligence seeking damages, with ReadyOne moving to compel arbitration under an arbitration agreement.
- Carreon sought limited pre-arbitration discovery on arbitrability to challenge the validity of the arbitration agreement and his capacity to sign.
- Carreon argued Franken Amendment may bar enforcement of arbitration for tort claims related to negligent hiring, supervision, or retention in a personal injury action.
- Trial court allowed limited discovery on Franken Amendment applicability and Carreon’s mental capacity, including federal contracts over $1 million and off-the-shelf items.
- ReadyOne sought mandamus relief, arguing Franken Amendment does not apply to personal injury claims and discovery was an impermissible fishing expedition.
- Texas Supreme Court standard for mandamus: abuse of discretion and no adequate remedy by appeal; discovery must be reasonably tailored to relevant issues.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Franken Amendment applicability to personal injury | Carreon contends Franken Amendment applies to negligent hiring-related torts. | ReadyOne argues the Amendment does not apply to personal injury claims. | Franken Amendment does not apply to personal injury claims; trial court abused discretion. |
| Pre-arbitration discovery on mental capacity | Carreon sought discovery to prove incapacity to sign arbitration. | ReadyOne argues lack of colorable basis for material discovery on incapacity. | Discovery on mental incapacity was an abuse of discretion; no colorable basis shown. |
Key Cases Cited
- In re Prudential Ins. Co. of Am., 148 S.W.3d 124 (Tex. 2004) (mandamus framework requires abuse of discretion and lack of adequate remedy by appeal)
- In re Cerberus Capital Mgmt., L.P., 164 S.W.3d 379 (Tex. 2005) (abuse of discretion defined for arbitration-related discovery)
- In re Houston Pipe Line Co., 311 S.W.3d 449 (Tex. 2009) (trial court may order pre-arbitration discovery with information gaps)
- In re CSX Corp., 124 S.W.3d 149 (Tex. 2003) (discovery must be reasonably tailored to relevant issues)
- In re Am. Optical Corp., 988 S.W.2d 711 (Tex. 1998) (fishing expeditions are impermissible in discovery orders)
- In re FirstMerit Bank, N.A., 52 S.W.3d 749 (Tex. 2001) (burden on party opposing arbitration to show colorable defense and potential discovery material)
- Walker v. Packer, 827 S.W.2d 833 (Tex. 1992) (adequate remedy by appeal absent cure of discovery error)
- Barron v. Vanier, 190 S.W.3d 841 (Tex.App.—Fort Worth 2006) (colorable basis required to justify jurisdictional discovery)